Question in regards to w-4 tax withholdings.
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Returning Member

Question in regards to w-4 tax withholdings.

 
14 Replies
Expert Alumni

Question in regards to w-4 tax withholdings.

What is your question in regards to your W-4?  

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Returning Member

Question in regards to w-4 tax withholdings.

I currently claim 2 allowances for state and 3 for federal. Since I filled my w-4 I have 3 kids now and my wife does not work. We file married and jointly single income. Should I change my allowances to reflect my situation? 

Employee Tax Expert

Question in regards to w-4 tax withholdings.

As part of the Tax Cuts and Jobs Act, the IRS and Treasury adjusted the tax withholding tables, which affects the amount of income taxes withheld from your pay.  For 2020, W4's have been completely redesigned.  Exemptions or Allowances are no longer applicable. 

 

My suggestion is to use the IRS Tax Withholding Estimator here

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Returning Member

Question in regards to w-4 tax withholdings.

With these changes do I still need to fill out an updated w-4 for my employer?

Employee Tax Expert

Question in regards to w-4 tax withholdings.

Yes

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Returning Member

Question in regards to w-4 tax withholdings.

Will me changing my w-4 change the amount of tax that is withheld with the updates to 2020?

Employee Tax Expert

Question in regards to w-4 tax withholdings.

Yes. Changing your W-4 will change the amount of tax that is withheld with the updates for 2020.

 

If you have state withholding, you can adjust that, too. Click here for the link to state Department of Revenue contact numbers. You would want to tell them you wanted to update your state tax withholding and needed the proper form to report that change. 

 

Your employer should have these forms for you, too.

Returning Member

Question in regards to w-4 tax withholdings.

When would changing your allowances put you at a risk for owning taxes?

Expert Alumni

Question in regards to w-4 tax withholdings.

This is a difficult question because there are no allowances or exemptions on federal returns any more. The way income tax is calculated has changed and the IRS withholding calculator is very different too. 

 

It sounds like you are probably okay with your current tax situation since your wife doesn't work and you have children. If anything changes, you could suddenly owe taxes if you don't fill out a new W-4 form.

 

Situations that can put you at risk of owing taxes include: a large raise, your child turning 17, additional income such as an inherited IRA or a prize, your wife getting a job, etc.

 

Click here to learn more about the new withholding estimator.

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Returning Member

Question in regards to w-4 tax withholdings.

I guess the area of confusion I have is if there is no withholdings or exemptions this year how does changing my w-4 effect anything?

Expert Alumni

Question in regards to w-4 tax withholdings.

I can understand why the Form W-4 is the number one question for 2020.  The withholding amount per pay period is based on your annual salary not exemptions.  The instructions for the new W-4 form has a table to indicate the withholding amount based on your gross pay per pay period and annual salary. 

 

Please refer to the link below for the W-4 withholding instructions.

 

https://www.irs.gov/pub/irs-pdf/fw4.pdf

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Returning Member

Question in regards to w-4 tax withholdings.

Based on that if I have 3 kids (2,000x 3) + my and my wife ( 2x500) I get 7000 total. What happens with this 7000 is my question? Is that amount withheld? Also what would the difference be compared to the old system?

Expert Alumni

Question in regards to w-4 tax withholdings.

I see you are referring to the $2000 per child tax credit.  This $6000 would reduce your tax amount when you file your tax return at the end of the year.  In regards to the $500 for you and your wife, this is not applicable.  The tax credit applies only to dependents who do not qualify for the child tax credit( $2000 per child). 

 

 None of these credits are considered when completing the W-4. Under the old system, credits, dependents, and other allowances were factored in.

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Returning Member

Question in regards to w-4 tax withholdings.

Then why is there a line to add 500 per other dependent on the new w-4? Thank you

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